MRP requirements calculation and decision making

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Posted on by Luis Filipe Fernandes

Hi everyone,

I'm struggling to achieve a reasonable logic within MRP engine in AX 2009 and would appreciate your thoughts. Explaining:

In an industrial plan with discrete industry and 3-level BOMS, we've configured a master static plan and a dynamic plan (automatically copied from the static), as usual. Infinite capacity and infinite material are set, in both plans. Forecast is in place and being considered, with the relevant reduction keys as we have items with long lead times and no medium-run firmed demand to work on (so forecast enables the organization to buy in time for these long-lead time items).

How to interact with MRP

The way it seems logical to use MRP is to execute a layer-by-layer analysis in sequence and coordination. In my opinion:

The first layer should be reviewing the finished goods planned orders and decision making: approve (with or without dates/quantity updates) or discard (either by deleting or marking them as processed). No firming has ocurred yet as we don't know if there's full material availabiliy for these productions.
- Example: in a planned production order for a finished good i'm seeing that the pegging is forecast. As this forecast is mapped to a short-run date, I can assume it can be discarded (because it was not converted to a sales order) and I don't actually need to produce the planned quantity. This means that I can delete or mark the order as processed in the static plan (meaning, I don't wan't to produce this item at this time).
When all finished goods are reviewed, we have at that moment an exact number for requirements of finished goods and following that, we should have the net requirements for all BOM-dependent raw-materials.
Now I would involve the purchase department to evaluate if our decisions regarding production are viable and that all required raw materials arrive in time. If OK, I can firm the finished goods planned production orders as well as all the related planned purchase orders.

Expectation:

When finishing step 1, I'm executing the Dynamic plan with "Net change" principle. The expectation would be for AX to identify that I've made changes in the static plan orders (marking several orders as processed, or even deleting them) and re-calculate the actual required raw-material quantities.

Problem:

AX is not considering my updates and always performs a full-calculation:

If I mark finished goods planned production orders as "processed" in the static plan, after the "net changes" of dynamic plan, AX still assumes I need those "processed" quantities.
If I mark finished goods planned production orders as "processed" in the dynamic plan, after the "net changes" of dynamic plan, AX still assumes I need those "processed" quantities.
If I delete the finished goods planned production orders in the static plan (or in the dynamic), after the "net changes" of dynamic plan, AX re-creates the orders and still assumes I need those full quantities.

Question:

Is this standard behavior? How can I make decisions on a BOM level (finished goods) and ask AX to re-calculate the required raw material based on those?

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guk1964 10,877 on at

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RE: MRP requirements calculation and decision making

I agree processes are the challenge. S&OP planning is much talked about but seldom practised. Forecasts are often just wish lists i.e they don't last as long as the lead time, and go to the wind when a real order comes in so there is then no consistent company game plan., Its a trade off between the efficiency of stability and the cost of turning away disruptive business, So don't be a busy fool- but tis OK to premium price to be reactive /give a high service. Ultimately your customers and suppliers also need to make the same choice about their costs and service. Is there any point having a sales forecast if its not shared with the vendors, and not the basis of the production plan for a frozen period?

Ax, like most erp system, can generate messages- in my experience many users ignore these but to really understand what is happening review of messages is necessary. Another area where the functionality is improved at Ax 2012.

A real problem is that mrp believes what you tell it e.g. with regard to lead time and capacity and this its plan should be a. correct and b. consistent at all levels.

Then we would not need a master scheduler! the problem is that in the real world the rules and policies change daily - we tell the system the raw material LT is 5 days but we know we can expedite if we pay more or collect it with our own transport. We tell the system the sales lead time is 5 days but we take a rush order because we know we can work overtime. We tell the system the vendor confirmed full delivery but it turn up short on the wrong date.

We know there is fire drill on Thursday and that machine 2 will run slow till the next pm, and the customer is happy to accept partial shipments, that the customer cancelled an order, and we firm our plan accordingly and then protect it with some time fences.

We also manage that noise by forecasts minimums, buffer stock etc. Its not practical to manage coverage parameters and policies order by order. When you pose mrp a dilemma i.e. a firm plan to make to tomorrow it believes you. But it knows you don't have capacity or materials - but hey you are the master planner so it believes you and plans to those formed sales and production orders. But its not happy. So it tries to help by bombarding you with messages to remind you to square the circle and to ensure you have not made a mistake or missed something . So it sends you an expedite message to helpfully tell you that you should have ordered this last week. That might help you to focus on what to expedite. What fi you can't? then it also sends you another message to take a different action like redating the order. So its possible you will get a planned order and a message to delete it. Unless you are clear on our policies and changes that can be confusing. Once you understand what they system is trying to do based on what polices and supplied demand sit ahs then the message can be a great aid.

However they can also be a noise- you need a delivery date this week to make next week so you notionally put Wed on the order and as long as it comes this week you don't care which day but the system does and sends you a reschedule message. You round up the quantity to save transport costs but the system doe snot understand why and suggests you amend it. Plan stability and sensible mrp parameters e.g for negative and positive days reduce the noise but there will always be the last mile for the master scheduler to mange - that is why he's the master scheduler not Ax.

Many companies either don't run mrp or only run it in expedite mode with a shortage report for these reasons. ABC, an empowered master scheduler, frozen forecasts, an agreed S&Op plan , sensible fences, CATP /ATP etc are a foundation that will show what a system like Ax can do. For many industries life is not so straightforward - but few understand the real cost of not having stable master plans.

Good luck. I'm interested to hear how you get on.
Luis Filipe Fernandes 25 on at

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RE: MRP requirements calculation and decision making

Thank you for your feedback. The parameter controlling if MRP should only calculate direct demand would be excellent but unfortunately is not available in AX 2009, as mentioned. I'm gradually realizing that most of these specific requirements are process-controlled more than system-controlled, with is a high risk for such an important process in SCM within an organization.

Still, it is almost unbelievable that AX does not allow for an automatic derived requirements recalculation when delete an order or mark it as processed. I'll keep my efforts regarding this process and provide some additional feedback if an answer comes up for anyone interested. Thank you.
guk1964 10,877 on at

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RE: MRP requirements calculation and decision making

The real world is often not as linear as we would like and we sometimes have to look both bottom up and top down to firm the dates/quantities at the top level.

Obviously the better the forecast and the appropriateness of the mrp parameters the less the short term changes that should be needed. ABC policies and a stable S&OP plan have a major role to optimise service, inventory levels, admin costs and planning focus.. Category B item plans should be around 80% unchanged in the short term and category c should largely be ok for a quarter or have short lead times. You seem to have a good understanding of such matters, bit tis always worth reviewing form time to time whether policies should be updated.

Running one level at a time would be faster, however with modern systems, batch helpers, code optimization and appropriate coverage fences etc a full mrp run might not take too long. Whatever you have released/firmed will then not be changed by mrp on the next run and old planned orders not processed, will be removed.

Old net requirements might have been left in the system because the supply or demand that caused the item to be planned has disappeared, so nothing has ever deleted the old records. So always use the delete plan function to delete your old plans before regenerating.

I suggest also run the Recalculate BOM levels batch. Inventory management>Periodic>Bills of materials>Recalculate BOM levels once wee - at a quiet time.

In Ax 2012 R3 Cu11 there is a master scheduling parameter on the General tab - Pre-processing: Automatically filter by items with direct demand. When that box is checked, an item will not be selected for planning unless there is some sort of supply or demand for the item. However in Ax 2009, as at as I know, its not been back ported.

However, in Ax 2009 there is a check box called "Track item progress duration" on the Periodic sub-menu, where you setup for scheduling the batch process, including number of helpers. This will detail items processed in the plan.
It might help to look at the Inventory transaction tables - each record has a physical date and an expected date - which is the MRP requirement date.
Luis Filipe Fernandes 25 on at

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RE: MRP requirements calculation and decision making

Thank you for the feedback. If that's true, this means that no sequential analysis and decision-making is possible, correct?

So, if as a "production planner" I cancel a planned production order (updating its status to "Processed" or actually deleting it), Dynamics AX will still keep the originally calculated derived requirements? I've noticed that if I update the quantity (+/-), the derived requirements are updated (+/-), but I cannot define quantity = 0 or cancel it entirely..

This would mean that although I have decided not to produce something, the purchasing department would still be led to believe that they need to replenish those unnecessary raw-materials? It seems very unreasonable for an MRP engine. Any possible workaround that noes not involve update the pegging criteria (I would not want to update a safety stock or a forecast line just because I decided not to produce a one-off production in a weekly planning cycle..
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PrzemekG 725 on at

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RE: MRP requirements calculation and decision making

Hi,

Yes, it is standard behavior.

From AX 2009 help:

You can conveniently manage planned orders from the Planned works orders, Planned purchase orders, and Planned transfer order forms.

You can use the Status field on the Overview tab as a tool to help you keep track of your progress. There are three options:

When master scheduling generates planned orders, they have the status of Unprocessed.

When you choose not to firm a planned order, you can give it the status of Processed.

When you choose to firm a planned order, you can give it the status of Approved. This indicates that you approve firming the planned order, but it is not firmed yet.

An approved planned order is transferred in its current state to the next master schedule calculation.

If you don't want AX to re-create planned production orders you have to delete the forecast (or sales orders).

AX calculates requirements for everything from top finished good to the lowest level of BOM in one master scheduling.

MRP requirements calculation and decision making

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